Mr. Chong Wei and Mr. Zaki are starting a new pet grooming business. There are five other well-established pet services the located in the same area. Mr. Chong Wei believes the most important objective in setting prices their new pet grooming business is to generate a large profit while keeping an eye on the competitors’ prices. However, Mr. Zaki believes it is important to maximize sales and set prices according to what your customers expect to pay.

Question 1.

Who is right and why? Explain your answer.

Question 2.

Assume both of them agreed to use competitor orientation pricing to set prices for their new pet grooming business, should they set the price higher or lower than competitors? Justify your answer.

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